Water District VIP Status Was Given to Son of Developer : Santa Margarita: Records indicate that ordinary shut-off provisions were not imposed, even though water bill went unpaid on two occasions.

The son of Mission Viejo Co. President James Gilleran was treated like a VIP at the Santa Margarita Water District and wasn’t subject to ordinary shut-off provisions when he didn’t pay his water bill, according to documents obtained by The Times.

Billing records and an internal district memorandum indicate that Michael P. Lord, assistant general manager who is now suspended, ordered the district’s customer service representatives not to turn off the service of James E. (Jed) Gilleran on two separate occasions in 1991 and 1992.

Gilleran is a son of James G. Gilleran, president of the Mission Viejo Co. That company, a large real estate developer, casts one of the largest voting blocks in determining the makeup of the Santa Margarita district’s board of directors.

Besides his VIP status, the younger Gilleran had another relationship with the water district: He was paid more than $8,000 by the district to wash and hand-wax some of its automobiles.

Former and current managers of Santa Margarita’s customer service department said the handling of Jed Gilleran’s water bills was “unusual.” Typically, they claim, the district’s 26,500 customers are shut off whenever their accounts are 50 or more days in arrears.

Gilleran’s account was the exception to the rule and was flagged in the water district’s computer literally as a “VIP,” records show.

Gilleran continued getting water service last year at his Mission Viejo home more than 80 days after his last payment to the district. And in 1991, Gilleran’s tap was still running even though he hadn’t made a payment in 78 days, records show.

“I would say it was a favor,” said customer service supervisor Myriam Forero.

James G. Gilleran was a board member of the Santa Margarita district in 1976 and 1977, records show.

Lord has accepted $800 in gifts from the Mission Viejo Co. over the last six years, including $100 worth of ballet tickets and $700 in business lunches and other meals, according to conflict-of-interest statements he filed with local authorities.

What’s more, Lord and James G. Gilleran have often lunched at district expense, records show. The Times turned up 11 lunch receipts totaling $939.21 since 1987 involving James G. Gilleran and Lord.

Lord’s attorney, Gary Pohlson, could not be reached for comment last week. James G. Gilleran and Jed Gilleran did not return several phone calls seeking comment.

Wendy Wetzel, a spokeswoman for the Mission Viejo Co., also declined comment.

“That is not something I would know anything about,” she said.

Lord and his boss, general manager Walter W. (Bill) Knitz, were suspended with pay last month after The Times revealed that both men had allegedly accepted gifts in excess of state limits and spent district funds on a range of perks, including limousine rides, Broadway theater tickets and thousands of dollars worth of room service.

Unlike the Santa Margarita district, no other water agency or city water department in Orange County that was contacted by The Times acknowledged having VIP customers who were immune to cut-offs.

“It is the policy of the Trabuco Canyon Water District to treat all its customers in a fair and equitable manner,” general manager J. Fred Sims said. “If you are referring to the payment of bills, no customer is given special consideration.” The Times disclosed last month that the water district paid Jed Gilleran $8,460 over a two-year period to wash and hand-wax the cars of its top five executives, including Lord. Gilleran charged $15 to $20 for a car wash and up to $75 for a wax job.

He cleaned and polished the cars between 1989 and 1991 in the district’s parking lot. Lord, records show, had his car washed three times in one week in late 1989.

George H. Castillo, the district’s customer service manager, said Gilleran was the only water district customer with VIP status.

Gilleran, Castillo noted, should “have been shut off twice.” Castillo added that the personal service afforded Gilleran was not given to “normal customers.”

“This account was coded VIP at the request of Mike Lord on or about Feb. 7, 1991,” Castillo wrote in a May 6 memo.

Gilleran’s account was first scheduled to be shut off on approximately that date, records show.

“Mike Lord intervened on behalf of the customer, Mr. Gilleran, ordering the customer service supervisor Myriam Forero to cancel the shut-off,” wrote Castillo.

Lord then instructed the department to notify him whenever Gilleran was behind in his payments, according to the memo. Gilleran’s account became delinquent again in August, 1992.

Lord “would notify the senior Gilleran who would in turn notify his son, our customer of record, to pay the outstanding bill. Customer service was not to shut off this account without prior authorization by Mike Lord,” according to Castillo.

Jed Gilleran’s water service was eventually shut off on Oct. 12, 1992, when he moved, records show.